3 Reasons To Buy An Auto Repair Business

Travelling by car remains one of the most popular choices due to convenience, personal needs, geographical location and personal likings.

But it brings its own problems – higher costs, depreciation, taxes, insurance, servicing and repairs – the last one weighing heavy on the mind a la an impending vaccination shot.

The “vaccination”, though unpleasant, can guard against breakdowns and higher long-term costs.

Here’s a godsend for those scouting for an evergreen, low cost-high returns business! Unlike businesses built on fickle fads or technologies, the auto repair business guarantees stability and profitability.

Honey, It’s All About Money

For a first-time wannabe entrepreneur, the acquisition price matters. Most businesses across industries sell for twice to thrice of the owner’s annual cash flow. But acquiring an auto repair shop is not going to cost a bomb as it comes for just 1.69 times the annual cash flow.

Put simply, an auto body shop Columbus Ohio, which currently makes $300,000 can be yours for around $508,000 – a really much more affordable deal. But the icing on the cake is that this business generates a median cash flow of 20%+ of revenues, that is – a shop with $ 1500,000 in revenues can generate a cash flow of $ 300,000+.

To boot, it’s almost recession-proof in that it can flourish in the worst of economic climates. When the economic going is good, auto repair shops can service new and pre-owned cars with standard maintenance and repairs at much better prices than at dealerships.

Conversely, during tough times, the owners will more likely stick to their cars longer and pay for car repairs than buy a new car. What makes your job easier is that you won’t need to fret over your cash being locked in receivables and inventory, save some equipment and tools.

Typically, such businesses work on immediate payment basis and need to stock really few large inventories, which are easily obtainable as per needs.

It’s All Green There

A business needs to have a strong, sustainable outlook for it to be really future-proof. Available market trends portray a bright outlook for auto repair shops.

In fact, it’s all about basics – the cars on the US roads continue to multiply each day, with the result that as of now, 247,000,000 vehicles are registered nationwide and the clock keeps ticking.

To be doubly sure, since 1960, the number of cars in the US has increased by 3.5 million annually, and auto experts expect little slowdown here.

For you, the corollary is obvious –the more the cars, the more the repairs! Contributing further to this positive outlook is the phenomenon of automobiles “living” longer today.

Earlier, most cars were sold off before they logged 70,000 miles, but better auto technology has lengthened their “lives”, with the result that even cars having done 100,000 miles+ keep running.

In general, older vehicles require more repairs and maintenance, which implies more business for you as a repair shop owner. To round it off, with the prospects of a better economy, trade analysts foresee a steady rise in the distances travelled.

If we believe the US Energy Information Administration (EIA), the number of car miles driven per year is projected to increase by 1.2 percent annually, pointing to a surging demand for auto repair shops.

The Many Bonuses

Common sense dictates that there’s little chance of your auto repair shop being supplanted by an online business. So, no worries here.

Besides, this is a highly fragmented business and a typical auto repair shop is staffed by less than ten employees, thereby lowering the personnel costs.

Unlike many other businesses, here you don’t have to be a mechanic yourself to run the business as mostly, it involves routine maintenance work and minor repairs, which can be assigned to trained auto mechanics.

Of course, you need to have good business and people management skills.

You have to pay extreme attention to maintaining excellent customer service to create long-term relationships and generate repeat business, which ultimately drives a business in the long run.

Should you feel the need to learn the ropes, you may sign up for the auto repair shop management classes available in many locations.

While auto repair shops do face competition from auto dealers, customers prefer them as they are reportedly more satisfied with them as dealerships charge visibly more.

As an auto repair business owner, you can maintain excellent work-family balance as such shops usually operate during comfortable business hours from Monday through Friday.

In a nutshell, this business scores on excellent market prospects, low set-up costs, sustained demand, excellent cash flows, negligible inventory costs, shorter payback period, and no “online fears”.

However, before signing on the dotted line, get a well-rounded, realistic idea of the business – Scout for a good location, look for good, reputable businesses, examine the state of equipment, study the financials, seek expert help and finally, do the legal paperwork.


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